Correlation Between JD Sports and CONSOLIDATED

Can any of the company-specific risk be diversified away by investing in both JD Sports and CONSOLIDATED at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining JD Sports and CONSOLIDATED into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between JD Sports Fashion and CONSOLIDATED EDISON N, you can compare the effects of market volatilities on JD Sports and CONSOLIDATED and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in JD Sports with a short position of CONSOLIDATED. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD Sports and CONSOLIDATED.

Diversification Opportunities for JD Sports and CONSOLIDATED

0.52

Correlation Coefficient

JD Sports  CONSOLIDATED

Very weak diversification

The 3 months correlation between JDDSF and CONSOLIDATED is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and CONSOLIDATED EDISON N in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CONSOLIDATED EDISON and JD Sports is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on JD Sports Fashion are associated (or correlated) with CONSOLIDATED. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CONSOLIDATED EDISON has no effect on the direction of JD Sports i.e., JD Sports and CONSOLIDATED go up and down completely randomly.

Pair Corralation between JD Sports and CONSOLIDATED

Assuming the 90 days horizon JD Sports Fashion is expected to under-perform the CONSOLIDATED. In addition to that, JD Sports is 1.48 times more volatile than CONSOLIDATED EDISON N. It trades about -0.17 of its total potential returns per unit of risk. CONSOLIDATED EDISON N is currently generating about 0.02 per unit of volatility. If you would invest  8,371  in CONSOLIDATED EDISON N on December 26, 2024 and sell it today you would earn a total of  47.00  from holding CONSOLIDATED EDISON N or generate 0.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	58.33%
Values	Daily Returns

JD Sports Fashion  vs.  CONSOLIDATED EDISON N

JD Sports Fashion

Risk-Adjusted Performance

Very Weak

Over the last 90 days JD Sports Fashion has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

CONSOLIDATED EDISON

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CONSOLIDATED EDISON N are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, CONSOLIDATED is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with JD Sports and CONSOLIDATED

The main advantage of trading using opposite JD Sports and CONSOLIDATED positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD Sports position performs unexpectedly, CONSOLIDATED can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in CONSOLIDATED will offset losses from the drop in CONSOLIDATED's long position.

The idea behind JD Sports Fashion and CONSOLIDATED EDISON N pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.